MediaCo Holding(MDIA) - 2022 Q1 - Quarterly Report

PART I — FINANCIAL INFORMATION Financial Statements The company reported a net loss of $5.1 million in Q1 2022, with total assets at $145.6 million and improved operating cash flow Condensed Consolidated Statements of Operations Net revenues increased to $11.5 million in Q1 2022, but operating and net losses widened to $1.2 million and $5.1 million respectively Consolidated Statements of Operations Highlights (Unaudited) | (in thousands, except per share amounts) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net Revenues | $11,535 | $9,743 | | Operating Loss | $(1,232) | $(634) | | Consolidated Net Loss | $(4,293) | $(3,253) | | Net Loss Attributable to Common Shareholders | $(5,131) | $(3,887) | | Basic and diluted loss per share | $(0.68) | $(0.55) | Condensed Consolidated Balance Sheets Total assets slightly decreased to $145.6 million, while total liabilities increased to $139.1 million, widening the total deficit Balance Sheet Summary (Unaudited) | (in thousands) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $8,757 | $6,121 | | Total current assets | $20,041 | $21,641 | | Total assets | $145,602 | $148,210 | | Total current liabilities | $16,535 | $13,983 | | Total liabilities | $139,112 | $137,771 | | Total deficit | $(21,358) | $(16,571) | Condensed Consolidated Statements of Cash Flows Net cash from operations significantly improved to $4.7 million, ending the period with $8.8 million in cash and equivalents Cash Flow Summary (Unaudited) | (in thousands) | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $4,661 | $578 | | Net cash used in investing activities | $(816) | $(95) | | Net cash used in financing activities | $(1,209) | $(164) | | Increase in cash and cash equivalents | $2,636 | $319 | | Cash and cash equivalents, end of period | $8,757 | $4,490 | Notes to Condensed Consolidated Financial Statements Notes detail accounting policies, business segments, and debt structure, highlighting revenue sources and a Nasdaq deficiency notice - The company operates two New York City radio stations and approximately 3,500 outdoor advertising displays in the Southeast and Mid-Atlantic regions[21] Revenue by Source (Q1 2022 vs Q1 2021) | Revenue Source | 2022 (in thousands) | % of Total | 2021 (in thousands) | % of Total | | :--- | :--- | :--- | :--- | :--- | | Radio Advertising | $6,177 | 53.6% | $4,955 | 50.9% | | Outdoor Advertising | $3,124 | 27.1% | $2,972 | 30.5% | | Digital | $730 | 6.3% | $485 | 5.0% | | Other | $1,336 | 11.5% | $1,194 | 12.2% | | Nontraditional | $168 | 1.5% | $137 | 1.4% | | Total net revenues | $11,535 | | $9,743 | | Long-Term Debt Composition (as of March 31, 2022) | Debt Component | Amount (in thousands) | | :--- | :--- | | Senior credit facility | $68,514 | | Notes payable to Emmis | $6,154 | | Notes payable to SG Broadcasting | $27,574 | | Total Principal | $102,242 | - On April 1, 2022, the company received a Nasdaq deficiency letter for not meeting minimum net income, with plans to regain compliance[90][91] Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes 18.4% revenue growth to advertising rebound, with rising operating expenses and $8.8 million in cash liquidity Known Trends and Uncertainties The mature U.S. radio industry faces digital competition, while the New York market saw 25.4% revenue growth in Q1 2022 - The U.S. radio industry is mature, with growth slowed by new media competition and audience fragmentation[102] - The company adapts by deploying HD Radio, developing interactive websites, mobile apps, and utilizing digital video platforms[103][104] - In Q1 2022, New York radio market revenues increased 25.4% year-over-year, driven by a COVID-19 rebound and specific advertising campaigns[105] Results of Operations Total net revenues increased 18.4% to $11.5 million, but operating expenses and interest expense also rose, widening the operating loss Net Revenue Change (Q1 2022 vs Q1 2021) | (dollars in thousands) | 2022 | 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Radio | $8,113 | $6,502 | $1,611 | 24.8% | | Outdoor Advertising | $3,422 | $3,241 | $181 | 5.6% | | Total net revenues | $11,535 | $9,743 | $1,792 | 18.4% | Operating Expense Change (Q1 2022 vs Q1 2021) | (dollars in thousands) | 2022 | 2021 | $ Change | % Change | | :--- | :--- | :--- | :--- | :--- | | Radio | $6,623 | $5,291 | $1,332 | 25.2% | | Outdoor Advertising | $2,709 | $2,470 | $239 | 9.7% | | Total operating expenses | $9,332 | $7,761 | $1,571 | 20.2% | - Corporate expenses increased by 51.6% to $2.5 million in Q1 2022, primarily due to personnel costs after the Emmis management agreement ended[116] - Interest expense increased 18.1% to $3.0 million due to additional loans, paid-in-kind interest, and a PIK interest rate increase on the senior credit facility[120] Liquidity and Capital Resources Primary liquidity sources are operations and borrowings, with $8.8 million cash and $10.4 million in upcoming debt service requirements Liquidity Position | (in millions) | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Cash and cash equivalents | $8.8 | $6.1 | | Net working capital | $3.5 | $7.7 | - Cash flow from operating activities increased to $4.7 million for Q1 2022, primarily due to significant accounts receivable collections[128] - Upcoming debt service requirements over the next twelve months are expected to be $10.4 million, primarily for the Senior Credit Facility[126] Quantitative and Qualitative Disclosures about Market Risk As an emerging growth company, the company is not required to provide market risk disclosures - As an emerging growth company, MediaCo is not required to provide disclosures about market risk[131] Controls and Procedures Management concluded that disclosure controls and procedures were effective, with no material changes to internal controls - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of March 31, 2022[133] - No material changes occurred to the company's internal control over financial reporting during the quarter ended March 31, 2022[134] PART II — OTHER INFORMATION Legal Proceedings Management confirms no pending legal proceedings are expected to have a material adverse effect on the company - In management's opinion, no pending legal proceedings are likely to have a material adverse effect on the Company[136] Exhibits This section lists exhibits filed with the quarterly report, including certifications and XBRL documents - This section provides a list of all exhibits filed with the 10-Q report, including certifications and XBRL data files[139] Signatures The report was duly signed on May 12, 2022, by the Executive Vice President, Chief Financial Officer, and Treasurer - The report was duly signed on May 12, 2022, by Ann C. Beemish, Executive Vice President, Chief Financial Officer and Treasurer[142][144]